An Exploratory Study of the Effect of Employee Turnover on Customer Satisfaction

Abstract

There is ample anecdotal evidence that higher levels of employee turnover lead to lower levels of customer satisfaction in retail stores. A search of the literature revealed no study that directly examined the consequences of turnover on customer satisfaction. This paper examines the relationship between employee turnover and customer ratings of overall satisfaction across 275 fast- food convenience stores operated by two different retail chains. Correlation analysis was used to examine the relationships between employee turnover and customer satisfaction. An examination of the correlation matrix reveals a number of interesting findings. First, there are different relationships between customer satisfaction and turnover among full-time and part-time employees. Higher levels of turnover of full-time employees were associated with lower ratings of overall customer satisfaction, friendliness and speed of service. Part-time turnover was significantly related only to speed of service. This relationship between part-time employee turnover and speed of service was negative, that is; when turnover of part-time employees was higher, customers perceived speed of service to be slower. This finding suggests that future work examining the effects of turnover on customer satisfaction should treat full-time and part-time employees separately. Combining these two groups, who have a fundamentally different relationship with the store and perhaps with customers, will confound results. These results also suggest that higher levels of turnover of part-time employees, if combined with a stable group of full-time employees, may not affect customer satisfaction very much.